What puts companies on top of the Sustainability Leadership list?

What puts companies on top of the Sustainability Leadership list?

In business, sometimes simplicity is praised and sometimes it is scorned. It can be hard to predict which reaction will win out.

Each year, the results of The Sustainability Leaders -- a GlobeScan/SustainAbility Survey of sustainability experts across corporate, government, NGO, academic, research, and service organizations in 75-plus countries remind us that simplicity is a more complex phenomenon than it might appear.

The 2012 Sustainability Leaders Survey was released this month. The poll asked respondents in February to name up to three specific companies that they consider to be leaders in integrating sustainability into their business strategy. Unilever, which launched its Sustainable Living Plan in late 2010, was mentioned most frequently for the second year in a row, while Interface was the next most frequently mentioned, followed by GE, Patagonia, and Walmart. While nine out of the top 13 corporate sustainability leaders were also among the top 13 in 2011's Sustainability Leaders Survey, Unilever and Patagonia are the only top companies that have seen their "market share" increase among the expert community in each of the past two years.

A number of criticisms are routinely leveled at the poll. Some dismiss it as a popularity contest. Some confuse it with empirical rankings or listings that score corporations on a multitude of performance criteria such as the Corporate Knights Global 100 or the Dow Jones Sustainability Index (and there are many others). Some call The Leaders Survey simply too simple because it is based on a single metric. And some have trouble reconciling results with what other sustainability rankings show. Indeed, Ceres announced plans for the Global Initiative for Sustainability Ratings last year that would develop a standardized method of measuring and ranking sustainability performance to un-muddy the waters.

However, these other empirical corporate sustainability ratings are not immune to criticisms themselves. Some are exclusive and require payment for participation. Others are criticized for a lack of methodological transparency. Trust in these rankings can be an issue. Indeed, SustainAbility's Rate the Raters study found that trust in NGOs was higher than in the ratings systems.

Some of our clients get excited when they see the results of The Sustainability Leaders Survey. But others may be worried. In this year's survey, GE was one of a number of companies that saw a decline in the proportion of mentions, from 12 percent in 2011 to 7 percent this year. Walmart, the top-rated company in 2010, saw its proportion fall from 11 percent to 7 percent, while mentions of Marks & Spencer declined marginally from 8 percent to 5 percent. What do these falls mean, though -- are these companies standing still or headed backward on sustainability? Most would say not.

But the very nature of The Sustainability Leaders Survey is competitive. Our expert respondents have to pick one or just a few companies who they think are top performers above others. That means those that have been most active within the past year tend to rise above those that have been least active, or those that have maintained course with their existing strategies, no matter how strong those may be. It is tough to stay on top.

So, much of the criticism the poll attracts is valid. It begs the question of what its true value is. Carpet manufacturer Interface valued the measure not just because their company led the rankings for several years, but because it is a simple, pure measure with a demonstrated high standard. It is easy to communicate to stakeholders. And it delivers an effective factoid for employee engagement. Employees like it when their company's hard work is recognized.

If we can take it as read that perceptions are important, especially those of a large group of skeptical sustainability practitioners around the world like those that make up our panel, the Sustainability Leaders Survey findings also have the benefit of capturing the effectiveness of communications and stakeholder engagement. For a company to appear in the ranking at all, our panelists need to know what the company is doing. It needs to have told a compelling story and have captured imaginations with its vision.

But gaps can open between actual sustainability performance and the recognition companies get for it. The Sustainability Leaders Survey can help find them.

Which brings us to another notable characteristic of the survey results -- they differ markedly by region. Among experts in North America, Walmart is most frequently named as a leader, slightly more frequently than Interface. Among those in Europe, Unilever is top-of-mind as a leader by some distance. Elsewhere, Natura and Unilever are cited nearly equally frequently. Local presence makes a difference in companies' ability to occupy share of mind.

What, then, does it take to crack the top-ten most frequently named leadership companies in the poll? In a recent webinar on the 2012 Leaders results hosted by GlobeScan and Sustainability, guests from two of our leading companies shared what they think are the answers. Karen Hamilton, Unilever's VP for Sustainability spoke of how the Sustainable Living Plan required the company to stretch itself internally. "It woke us up as a company," she said. And it appears to have captured imaginations. "People responded to our plan." Karen thinks that speaking to people as citizens rather than consumers makes a big difference.

Realism helps as well. Karen noted that Unilever does not (yet) know exactly how to achieve all of its goals. In part to address that, we helped Unilever to engage more than 2,000 key opinion formers in a 24-hour constructive dialogue on solutions on April 26th. Stakeholder engagement on this scale can only help Unilever retain its place at the pinnacle of the Leaders ranking.

Also during the webinar, Rick Ridgeway, VP of Environmental Initiatives for Patagonia talked about transparency. We "openly ask hard questions" and we are "critical of ourselves," he noted. The company "questions the concept of the growth economy because it is not turning around key indicators."

We also asked our survey panelists why they chose the company they did. One of our panelists commented that Unilever deserved singling out because of the way its Sustainable Living Plan integrates sustainability with business strategy. Patagonia was named by another for its effort to challenge business models. When you add up our expert panelists' answers, what rises to the top are integrated values, ambition, long term commitment, transparency and demonstrated results. Thus, it seems that views on what constitutes sustainability leadership within our leading companies are aligned with the opinions of our survey panelists who do the evaluating -- surely a recipe for success.

Getting the prerequisites for leadership right, let alone winning recognition for it, is no simple task. But for The Sustainability Leaders Survey and the companies it rewards, sometimes simplicity is a good thing.